This is the 9th in a series of ideas where I contrast a cheap security with an expensive one that otherwise shares some characteristics. So far, I am 6 for 8:
| BUY | SELL | |||
| MPR | NLC | |||
| 13-Mar | 7.30 | 11.99 | ||
| 28-Aug | 9.78 | 17.52 | ||
| 34.0% | 46.1% | -6.1% | ||
| JNJ | AGN | |||
| 17-Apr | 53.05 | 49.49 | ||
| 28-Aug | 60.29 | 55.10 | ||
| 13.6% | 11.3% | 1.2% | ||
| COLM | UA | |||
| 1-May | 30.36 | 24.00 | ||
| 28-Aug | 39.94 | 24.30 | ||
| 31.6% | 1.3% | 15.2% | ||
| BCR | ISRG | |||
| 8-May | 73.52 | 158.77 | ||
| 28-Aug | 80.31 | 224.90 | ||
| 9.2% | 41.7% | -16.2% | ||
| EZPW | AAN | |||
| 5-Jun | 13.09 | 32.85 | ||
| 28-Aug | 13.46 | 26.64 | ||
| 2.8% | -18.9% | 10.9% | ||
| SCVL | PSS | |||
| 19-Jun | 12.04 | 14.38 | ||
| 28-Aug | 16.21 | 15.84 | ||
| 34.6% | 10.2% | 12.2% | ||
| HRL | DIN | |||
| 9-Jul | 34.09 | 31.80 | ||
| 28-Aug | 36.89 | 21.91 | ||
| 8.2% | -31.1% | 19.7% | ||
| AKAM | NTAP | |||
| 14-Aug | 18.01 | 23.59 | ||
| 28-Aug | 18.11 | 23.32 | ||
| 0.6% | -1.1% | 0.8% | ||
| Average: | 4.7% |
For reference:
- 3/14: Buy Met-Pro (MPR), Sell Nalco Holding (NLC)
- 4/18: Buy Johnson & Johnson (JNJ), Sell Allergan (AGN)
- 5/3: Buy Columbia Sportswear (COLM), Sell UnderArmour (UA)
- 5/10: Buy C.R. Bard (BCR), Sell Intuitive Surgical (ISRG)
- 6/6: Buy EZCORP (EZPW), Sell Aaron's Rents (RNT)
- 6/20: Buy Shoe Carnival (SCVL), Sell Collective Brands (PSS)
- 7/9: Buy Hormel (HRL), Sell DineEquity (DIN)
- 8/15: Buy Akamai (AKAM), Sell NetApp (NTAP)
Today's trade idea involves two companies that are both in my watchlist. I wrote positively about O'Reilly (ORLY) last year, but it has almost doubled since then as the thesis has played out. I wrote about Dorman Products (DORM), a major supplier to ORLY and other auto parts retailers, in February and then again in May. It had a huge run, and I sold the position. I added it back very recently in my Top 20 Model Portfolio and continue to like it here. Let's go to the tape:
I probably shouldn't pick too much on ORLY, as I believe it was hit along with peers on the Cash for Clunkers program that took a small amount of potential customers off the road. I had been concerned that DORM was getting squeezed by its customers, but the last two reports tell me that pressure is abating. If ORLY works, DORM should work a lot better. DORM has a similar growth profile, a superior financial structure and a much lower valuation. My analysis doesn't include the off-balance sheet lease exposure of ORLY either.
Disclosure: Long DORM in a portfolio I manage
